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What is the tax difference between single member LLC and multi-member LLC?

Lawrenceville, GA |

what is the tax difference between single member LLC and multi-member LLC?

Attorney Answers 2


While an LLC with more than one member will be treated as a partnership for tax purposes, it has the right to elect to be treated as a corporation, either a regular of "C" corporation, or an electing corporation under Chapter S of the Internal Revenue Code. If you have an LLC that desires to do an S-Corp election, just fill out the 2553 form (S Election) as normal – but at the top of the form write “Pursuant to Rev. Proc. 2004-48” – if you are mailing it in, then it needs to be in red ink, but if faxing it doesn’t matter. If you make the S election, then you do not need to fill out the 8832 (Check-a-Box) form. If you wish to elect corporate status, but not S corporation, then file form 8832.

A single member LLC cannot be treated as either a partnership, or a corporation. It must be treated as a sole proprietorship for tax purposes. The IRS calls single member LLCs "disregarded entities." The file no tax return, rather their operations are reported on Schedule C of the member's income tax return. I’m not sure that all states permit single member LLCs, but Illinois, where I practice, does.

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An LLC, whether with a single member or multiple, can elect (subject to certain restrictions) to be taxed as a C corporation or an S corporation. Otherwise, it is treated as a sole proprietorship if it is has one member or a partnership if it has multiple members.

If you would like to discuss any issues further, please feel free to contact my office. The link to my contact information is below. Thank you.

The foregoing is general information only, not specific legal advice. No attorney/client relation has been created or should be implied.

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